For Idahoans, the Donald Trump administration’s One Big Beautiful Bill Act will impact state and local taxes, Medicaid and SNAP.
Signed into law on July 4, this massive piece of budget reconciliation legislation is daunting, covering hundreds of provisions in approximately 887 pages. While tax cuts are the main focus, the bill’s effects extend far beyond finances.
What is the OBBBA?
Tax cuts are the focus of this legislation, but it’s easy to lose details in the sheer size of this bill. The bill contains about $4.5 trillion in tax cuts, according to PBS, and extends Trump’s first-term tax cuts, along with a child tax credit cap raise and State and Local Tax deduction increase. Tip-based workers will see changes to their taxes as well.
Around $350 billion will fund Trump’s border and national security agenda, involving defense programs like the controversial Golden Dome missile defense system and the U.S.-Mexico border wall. $46 billion is allocated for the wall and $45 billion for 100,000 beds in migrant detention facilities, with $25 billion for the development of the Golden Dome.
This funding will have to come from somewhere, so the bill moves a lot of money around. A vast amount will be pulled from the resources that provide millions of Americans with food and healthcare, and federal student loans will have more limits.
Even with these slashes, the Spokesman-Review reported that less than a third of the law’s projected cost will be covered, potentially even less if the temporary cuts expire. The remainder, around $3.4 trillion, will have to come from foreign creditors purchasing bonds. The debt ceiling has also been raised.
Taxes
Some major impacts on taxation include cementing the Tax Cuts and Jobs Act of 2017, a raise of the child tax credit cap, a SALT deduction increase and the widely promoted “no tax on tips.” If you are a parent or working a tip-based job, specific provisions will affect you beyond the TCJA being made permanent.
The cuts of the TCJA will be made permanent under this new bill, and the child tax credit will be increased to $2,200 according to CNBC (note that this is the credit cap, not a set amount). SALT deductions will be raised to $40,000 “for taxpayers earning less than $500,000 from 2025-2029,” according to the Tax Foundation, but they will revert to $10,000 in 2030.
One of the biggest advertising points of this bill is the reduction of taxes on tips and overtime. If you earn under $150,000 individually per year, you can avoid taxes on up to $25,000 of tip income and up to $12,500 on overtime, according to CNN.
However, these benefits may be mitigated or nullified if you are reliant on Medicaid or SNAP benefits. The U.S. Government Accountability Office found that wage-earning adults receiving Medicaid and SNAP who work in the private sector are more likely to work in hospitality and food service, industries that are more likely to receive tips. Approximately 90% of Medicaid and SNAP recipients work in the private sector.
“While I think that streamlining the tax code and cutting waste and fraud in government spending are good goals, this bill is economically irresponsible in a number of ways,” University of Idaho Professor of Economics, Eric Stuen, said. “Increasing the already very large national debt is risky right now, with interest rates high. There will be less fiscal capacity for the government to respond to a future recession or financial crisis.”
“We are already seeing signs that financial markets think the risk of the United States defaulting on its national debt is going up, as the interest rate on 10-year treasury bonds has been elevated in 2025 relative to the previous year,” Stuen said.
The OBBBA raised the national debt limit by $5 trillion so that money could be borrowed to fund the bill. According to the Spokesman-Review, interest on this debt exceeds $36 trillion today, and costs taxpayers more than all other line items in the federal budget, except for Social Security and Medicare.
Student Loans
One of the most relevant sections of the bill for a large proportion of students is the handling of federally funded student loans. Previous repayment plan options will be reduced and caps are being instated on how much individuals can borrow to pursue higher education.
As the repayment plan options are reduced from seven to two plans, enrollees in to-be-eliminated programs have until July 1, 2028, to switch to a new one.
Beginning July 1, 2026, new student loan borrowers will have to choose between two loan plans. These are either a standard repayment plan or the Repayment Assistance Plan, an income-driven repayment plan. The former allows for fixed payments over 10-25 years, while the latter allows payments of 1-10% of one’s income monthly, for up to 30 years. The White House said that the reduction of student repayment programs “condenses a maze of loan options into two.”
Notably, the new income-driven repayment plan employs a longer timeline than previous versions, which last 20-25 years rather than 30. The increased timeline worried Aissa Canchola Bañez, policy director at advocacy group Student Borrower Protection Center, who spoke to CBS MoneyWatch about the Repayment Assistance Plan, saying, “Borrowers are going to be forced to be in repayment for even longer.”
Dean Kahler, Vice Provost Strategic Enrollment Management at UI, discussed what this means for currently enrolled students. “The federal student assistance program has been evolving quickly with the new administration. We are working to find student resources for our students,” he said. He encourages those who need assistance to reach out to the student financial aid office.
Those enrolled in Biden’s income-based SAVE plan, which is to be eliminated under the OBBBA, will see interest begin to accrue on Aug. 1, according to the Education Department via the Spokesman-Review.
According to Newsweek, the Student Borrower Protection Center has also calculated that this new loan framework may raise annual loan payments by “$2,929 for typical degree-holding borrowers, $1,761 for those with some college but no degree [and] $2,808 for a family of four headed by a bachelor’s degree holder.”
Borrowing caps are also being instituted on certain loans. Parent PLUS loans, available for parents of dependent undergraduate students, will be restricted to $20,000 annually with a total cap of $65,000. Currently, the limit is set at the total cost of attendance, subtracting student aid received.
Grad PLUS loans, used to finance higher education, will be cut almost completely. Applications will no longer be accepted, while current borrowers will retain their access to the loans, according to Edsource. Both of these changes will begin on July 1, 2026.
Graduate students who need federal tuition assistance will now have to pivot towards Direct Unsubsidized loans for professional degrees, such as law and medicine, according to CBS Moneywatch. These will be capped at $50,000 annually and $200,000 lifetime. Nonprofessional advanced degrees, such as philosophy and history, will be capped per year at $20,500 and lifetime at $100,000.
“We are currently evaluating the rule changes to determine what impact it will have on our students and to determine if there are any options we can offer to our students,” Kahler said. “While our students’ [and] parents’ average federal debt load is lower than the figures indicated, there are students and/or parents who have exceeded or are approaching the loan limits under the new rules. We have had graduate students who utilized the GradPlus Loan program. We are exploring alternative loan options to which we can refer our students to help with their education costs.”
“I think there is a real problem with students taking loans for some master’s programs that aren’t worth it,” Stuen said. “But a big downside of the graduate loan cap will be for medical students, whose degrees would likely be worth taking hundreds of thousands of dollars of debt for. The new law could make it impossible for low-income medical students to pursue their degrees and so further limit the supply of doctors.”
Pell Grants, the largest source of federal aid for low-income students, will also face tightened eligibility. Kahler said he is not aware of any instances of exploitation at UI that could warrant these restrictions.
“We want to do our best to assure that the aid is provided to the students who need it most,” Kahler said. “We will do our best to help our students/families navigate the application process to obtain the maximum financial aid for which they are eligible.”
Students receiving full scholarships from colleges or universities will no longer be considered for funding from the program. However, Pell Grants will become more available for those in workforce training programs, expanding the previous limit of 600 hours and 15 weeks that could be covered.
The Student Aid Index, used to determine one’s federal aid eligibility, will now increase scrutiny, reducing higher-income families who can access Pell Grant Funding. Notably, the FSA website already explicitly states, “Federal Pell Grants usually are awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor’s, graduate or professional degree.”
Finally, those still paying off their loans will be facing changes to deferment. Pre-OBBBA, loan borrowers were able to apply for a maximum of three years of deferment due to economic hardship or unemployment. This policy is visible on the FSA website.
However, starting July 1, 2026, deferment provisions for those facing economic hardship will be eliminated. If you lose your job and are struggling to meet your loan payment, you will no longer qualify to defer.
Medicaid
Medicaid and the Children’s Health Insurance Program are estimated to lose $1.02 trillion in federal spending, according to the nonpartisan Congressional Budget Office. T the Center for American Progress this is partially attributable to the elimination of an estimated 10.5 million people from said programs by 2034 through new eligibility restrictions.
Idaho Medicaid is expected to have $4.3 billion slashed over the next 10 years and have its enrollment drop by as many as 40,000 people, according to Manatt Health.
“It should be noted that the cuts to Medicaid are not explicit in the BBB Act: it only increases work and proof-of-eligibility requirements, which reduces fraud and waste,” Stuen said. “But most economists and policy analysts expect that millions of people will be cut off from Medicaid due to what has happened before when work and proof-of-eligibility requirements are increased: people who are still eligible for Medicaid don’t get the necessary paperwork done.”
Idahoans may be faced with unique challenges under these cuts. The OBBBA sets a cap on how much states are allowed to tax their health care providers, a practice that is done to acquire additional federal funds for Medicaid. In an interview with the Idaho Capital Sun, Hillarie Hagen, senior policy associate with Idaho Voices for Children, said that this change leaves “a pretty significant hole” in Idaho’s Medicaid budget.
“Now it is on our Idaho Legislature to look at how we’re going to pick up the costs from these federal cuts,” Hagen said. “And we’re going to be facing very significant, difficult choices in the coming year on whether to eliminate certain programs, or we’re going to see a lot of people lose access to Medicaid.”
Idaho’s U.S. Senator and proponent of the bill, Mike Crapo, disagrees, saying “the attack that people are going to be forced off of Medicaid is not correct,” to the Sun. “The only way to prove this is to wait and see what actually happens. But the bottom line is this: no one’s benefits were cut in this legislation – unless you are a person who is not an American citizen and not legally present in America… Or if you are a person who is registered in multiple states and are getting payments in multiple states.”
The OBBBA requires that individuals prove they are either part-time students or working, receiving work training or participating in community service for at least 80 hours monthly, unless otherwise exempt. This will negatively affect those currently on Medicaid who are still searching for or struggling to secure employment, or those who cannot find reliable transportation.
According to the Sun, cost-sharing copayments of up to $35 will also be mandated for those enrolled in Medicaid expansion, barring some exceptions. More than 2.6 million people in this group are adults without Supplemental Security or disability income who face challenges working on account of disability or illness.
The significant cuts to Medicaid will have wider impacts still, with rural hospitals expected to face major blows due to the loss of Medicaid reimbursements, according to ABC.
Rural hospitals have some of the lowest operating margins nationwide and many rely heavily on Medicaid revenue. The OBBBA includes $50 billion over 5 years as relief funding for these rural hospitals to supposedly offset the burden of the trillion-dollar cut. “Many rural hospital advocates are wary that it won’t be enough to cover the shortfall,” said ABC.
“The cuts to Medicaid, which were pushed off to 2027, are also economically irresponsible,” Stuen said. “While the government may save money in the short term, the costs of having millions more people without health insurance will take the form of a lack of preventative care, leading to more catastrophic health outcomes down the line, more emergency room visits and more hospital closures, especially in rural areas.”
An analysis by the Cecil G. Sheps Center at the University of North Carolina at Chapel Hill predicts that more than 300 hospitals may be at risk due to these slashes. This may result in rural area residents suddenly having to commute to hospitals outside of their towns rather than having an easily accessible location, which would be devastating in case of medical emergencies.
According to the nonprofit KFF, which researches health policy, more than 20% of Americans live in rural areas, with Medicaid coverage for one out of four adults. Another KFF report shows 36 states losing at least $1 billion over the next decade in Medicaid funding, bearing in mind the $50 million relief.
Health Insurance
The potential for rural hospital closure won’t be the only way those not on Medicaid will have their health insurance threatened. The Sun reported that premium tax credits used to buy health insurance on exchanges are not extended under OBBBA. Without Congress making those extensions, insurance premiums will likely surge, leading to a potential loss of health insurance coverage for 35,000 Idaho residents.
Crapo promised to the Sun that Congress will address this in future legislation, though he does not yet know how.
SNAP
The Supplemental Nutrition Assistance Program, more commonly known as SNAP or food stamps, is a benefit that many low-income families and individuals rely on to purchase food. The OBBBA will slash around $186 billion over the next decade for the program.
According to the USDA, in the fiscal year 2023, an average of 42.1 million people utilized SNAP per month, or 12.6% of the country’s residents. Currently, states and the federal government split the administrative costs of SNAP, while the federal government foots the bill for benefits.
Under OBBBA, rather than paying half of the administrative costs, the states’ share will rise to 75% according to the Association of State and Territorial Health Officials. This will reportedly raise Idaho’s SNAP costs by $6 million annually. ABC also reported that states will have to start taking on 5% of the benefits costs starting in 2028.
The bill will also restrict eligibility, as the work requirement age will be raised from 54 to 64, and parents with dependent children over 6 years old will have to meet work requirements. Parents with dependent children of any age were previously exempt from these requirements, ABC reported. Work requirement protections for veterans, unhoused individuals and former foster youth will be removed, according to the Food Research & Action Center.
SNAP cuts are estimated to amount to around $230 billion over the next decade, cuts which are supposedly targeting “waste, fraud and abuse.” According to the Idaho Department of Health and Welfare, most eligible Idaho households must have resources under $5,000 to qualify for SNAP benefits. Idaho Voices for Children Policy Director Kendra Knighten said to the Sun that approximately 4,000 Idahoans may be at risk of losing food assistance benefits.
Yale Budget Report
A Yale Budget Lab report was released on June 30, which explored the distributional effects of selected provisions from the OBBBA. The modifications to taxation, Medicaid and SNAP spending outlined in the Senate version of the budget reconciliation bill would mean a decline of 2.9%, approximately $700, in income for the bottom 20% of earners, and an increase of 1.9%, approximately $30,000, for the top 1% from 2026-2034.
Both U.S. Sen. Jim Risch and U.S. Sen. Mike Crapo, vocal proponents of the OBBBA, made adamant comments to the Sun, emphasizing that the legislation is not a tax break for the wealthiest Americans; instead, it will protect Americans from a $4 trillion tax hike by extending TCJA and provide Idahoans with numerous benefits, they claimed.
“[Our bill] delivered the largest tax relief package for working and middle-class Idaho families in U.S. history,” Risch said in an email to the Sun. “We eliminated taxes on tips and overtime, enhanced the child and childcare tax credits and are helping Idahoans keep more of their hard-earned income.”
Crapo’s statement to the Sun followed this sentiment. “Billionaires are going to pay the same taxes next year as they pay this year. There was no tax cut for billionaires,” he said. He said that an average Idaho family of four will see $2,600 in tax savings, though he didn’t address lower-quintile families specifically.
According to Idaho Fiscal Policy Center Policy Analyst May Roberts via the Sun, the bill “delivers massive tax breaks to the wealthiest Americans while offering little relief to low- and middle-income families,” and the state’s top earners will see average cuts of over $78,000 while the lowest will see a $20 one.
Roberts also highlighted that “the tax cuts benefiting the wealthy were made permanent, while those intended to support working families are temporary and set to expire in just a few years.”
Timeline
Something incredibly important to keep in mind is the fact that all of the above will not happen simultaneously. The Spokesman-Review highlighted that many of the positives of the bill, including the tax breaks and other benefits of the legislation, will take effect within the near future, largely beginning in early 2026. Conversely, the cuts to healthcare spending and other components expected to raise the cost of living for Americans will take effect much later, many after midterm elections and some as late as 2029.
As Trump’s presidency ends, so will the tax breaks on tips, overtime wages and auto loan interest payments, all of which are scheduled to expire near the end of his term, unless extended by Congress. For particulars on when many of these provisions will go into effect, a Newsweek breakdown is available here.
The One Big Beautiful Bill is certainly true to its name in regards to its enormity, and only time will fully tell the effects of this bill in the long term. While many Idahoans may see some initial tax breaks and benefits, the OBBBA’s effects will differ both over time and depending on the quintile and circumstances of the individual impacted.
Julia Kolman can be reached at [email protected].
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One Big Ugly Bastard in the white house.